The Government has been very responsive in making changes to procurement policy to help protect suppliers, their workforce and their supply chains during the COVID-19 pandemic.
Their latest PPN: Use of Procurement Cards, is aimed at maintaining cashflow to suppliers, while also ensuring the public sector is able to access goods and services quickly.
What has been introduced with this PPN? Procurement Cards are being highlighted as the preferred method for purchasing goods and services, and the key points from this document are:
Single transaction limit increased to £20,000 for key card holders
Monthly limit on procurement card spend set to £100,000
Monthly procurement card spend in excess of £100,000 is permissible to meet business needs.
Opening up of more purchase categories providing access to a greater range of goods and services.
Above points apply to all Central Government Departments, their Executive Agencies and Non Departmental Public Bodies.
Effective immediately as of 6 April 2020
What are procurement cards? Procurement Cards are essentially charge cards used to purchase goods and services directly. These cards allow for instant payment and avoid the need to go through any forms of purchasing processes.
What is the benefit of using Procurement Cards? The instant transactions are the major benefit to suppliers, receiving prompt will help them to protect their business, their employees and their supply chains.
By making Procurement cards the preferred payment method and increasing their spending limits, the Government is helping contracting authorities follow the instructions set out in previous PPN: Supplier relief due to COVID-19 – which focuses on prompt payment to support businesses and protect jobs during the COVID-19 outbreak.
Businesses of all sizes are feeling the impact of the coronavirus pandemic, and on March 20th the Cabinet Office issued reassurance to suppliers with the Procurement Policy Note: Supplier relief due to COVID-19. The document serves as guidance for public sector bodies on protecting suppliers, their workforce and supply chains, helping to ensure service continuity now and into the future.
The policy changes have been put in place with immediate effect until 30 June 2020, and the key actions are:
Urgent review of contract portfolio and inform suppliers who they believe are at risk that they will continue to be paid as normal (even if service delivery is disrupted or temporarily suspended) until at least the end of June.
Put in place the most appropriate payment measures to support supplier cash flow; this might include a range of approaches such as forward ordering, payment in advance/prepayment, interim payments and payment on order (not receipt).
If the contract involves payment by results then payment should be on the basis of previous invoices, for example the average monthly payment over the previous three months.
Ensure invoices submitted by suppliers are paid immediately on receipt (reconciliation can take place in slower time) in order to maintain cash flow in the supply chain and protect jobs.
To qualify, suppliers should agree to act on an open book basis and make cost data available to the contracting authority during this period. They should continue to pay employees and flow down funding to their subcontractors.
As a supplier, the final point highlights that during this period, you will need to work collaboratively and ensure there is full transparency and operate on an ‘open book’ basis. This means you should share data if requested, to demonstrate the payments you receive have been used in the manner intended.
The PPN provides full details of how public sector bodies are to respond to issues that will affect contract delivery and are a direct result of COVID-19.
Unless you have been living under a railway bridge for the last 10 years, you will know that in 2010 the UK Government approved the plan to create High Speed 2 (HS2): a high speed railway from London to Manchester/Leeds.
Off the rails? Most definitely on. HS2 will shrink the travel time for many commuters and travellers between the cities in the Midlands and London, and for freight by improving lead times on deliveries, that in turn improves customer satisfaction (railtechnologymagazine.com).
HS2 will be one of the most ambitious projects undertaken in this country in recent years. The venture will create tens of thousands of jobs and generate billions of pounds worth of contract opportunities for suppliers in many fields. With 2026 the deadline date for HS2, what have we seen so far in terms of opportunities?
Leading e-procurement services provider Millstream is to exhibit at the NHS Confederation annual conference next week, when NHS reform and its financial challenges will be on the agenda.
The NHS Confederation is the membership body for all organisations that commission and provide NHS services and its annual conference and exhibition is being held at the ACC Liverpool from June 5-7.
Millstream runs the mytenders and Tenders Direct websites, which allow public sector organisations to publish tenders and private sector companies to bid for new business, as well as national procurement portals for Scotland, Wales and Norway.
Like local authorities, transport operators and other public bodies, NHS trusts are bound by strict rules on procurement, which affect every purchasing decision made in the public sector.
A colleague of mine recently sent me an article about authorities who have been permitted to proceed with contracts after being challenged by a supplier. Now, if you remember one of my more recent posts, A Slap on The Wrist for Authorities I discussed (in short) how more authorities are being pulled up for their actions when awarding contracts unfairly and what you could do as a supplier, I believe my exact words were, “just by making a formal complaint you can put a hiatus on the contract award”. Imagine my surprise when I read the article about three cases where the court lifted the suspension and allowed the contract to continue. Apparently the new Remedies Directive has a tiny little loophole, the same law that allows suppliers to put the brakes on a contract award allows authorities to continue the contract until something more concrete is settled in court. Now this won’t be the case for every authority, they must have to merit the circumstances, but it might put some suppliers off the idea of challenging authorities in court. The courts have suggested awarding damages may be the best way to solve the issue when dealing with brazen suppliers willing to challenge the system. The first case was for cleaning services in a college, the college fought that they needed the cleaning services to continue classes, therefore the college was permitted to carry on with the chosen supplier until an agreement was reached in court (i.e. damages). The second case was for an NHS trust which obviously needed to continue business as usual as they are dealing with people’s health, so again the NHS trust were permitted to use the chosen supplier. The third case was regarding landmine clearance in Cambodia…… need I say more?
So what does this mean for suppliers? Will any challenged authority be quoting these cases in court? If the courts feel that damages will be the best path to take when these cases arise, is this really good value for public money? I feel this loophole goes against the power the authorities were kindly given. It goes back to the same old idealism, be transparent and do it right in the first place. If any of our readers are running into trouble with Authorities, let us hear your story!